Question Details

	Username: BobM Rating: Asked to: Chaoxiang Lee Date Created: 07 Feb 2017
Category	28
Tag	Financial
Question	What is 'Compounding'?

Advice from Guru

Hello BobM,

Compounding is the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes. This exponential growth occurs because the total growth of an investment along with its principal earn money in the next period. This differs from linear growth, where only the principal earns interest each period.

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